The yen hit its lowest level against the dollar since late April on Thursday and looked vulnerable to more losses after the head of Japan's main opposition party called for a move towards negative interest rates.

The euro rallied to a two-week high against the yen and also rose against the dollar, despite data showing the euro zone slid into recession in the third quarter of 2012.

Shinzo Abe, the head of Japan's Liberal Democratic Party and frontrunner in next month's election, wants the Bank of Japan to consider sub-zero interest rates and reverse the yen's strength.

So you borrow a million dollars from the bank, put it in a vault, and after a year, you give them back $990,000. Yeah, that will fix the economy!

We've got negative real interest rates here already (interest rates less than inflation). But you can't do the vault trick with just negative real rates.